1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Shkiper50 [21]
1 year ago
12

You are the CFO of Designer Brands and expect your firm to generate FCFs of $550,000 per year (starting next year) for 10 years.

After that, annual FCFs will grow by 1% per year forever. Therefore, FCF in year 11 would be higher than FCF in year 10, FCF in year 12 would be higher than year 11, and so on. You expect a cost of capital of 4% for Designer Brands. How much would you value Designer Brands
Business
1 answer:
Lemur [1.5K]1 year ago
3 0

I would value the Designer Brand as $16,970,189.21.

<h3>What is the value of the designer brand?</h3>

The value of the designer brand can be determined using the two-stage FCF growth model.

FCF each year from year 1 to 10 = $550,000

FCF from year 11 = ($550,000 x 1.01) / (0.04 - 0.01) = $18,516,666.67

The present value of the FCF would be determined next:

($550,000 / 1.04) + ($550,000 / 1.04^2) + ($550,000 / 1.04^3) + ($550,000 / 1.04^4) + ($550,000 / 1.04^5) + ($550,000 / 1.04^6) + ($550,000 / 1.04^7) + ($550,000 / 1.04^8) + ($550,000 / 1.04^9) + ($550,000 / 1.04^10) + ( $18,516,666.67 / 1.04^10) = $16,970,189.21

To learn more about FCF, please check: brainly.com/question/8058024

You might be interested in
A two digit number is such that, the sum of its digit is 13. When the digits are interchanged, the original number is increased
LekaFEV [45]

Answer is 67.

As, 6+ 7

= 13

Also, when 67 is interchanged(76), the original no. is increased by 9.

7 0
2 years ago
In 2016, teller company sold 3,000 units at $600 each. variable expenses were $420 per unit, and fixed expenses were $270,000. t
Anit [1.1K]
Assuming that you have the values for the year 2017, the break-even point would be 1500 units for the year 2017. To calculate this, we use the idea that at the breaking point, total sales is equal to the total cost or expenses made. Which would be:

selling (x) = fixed + variable (x)

x = fixed / (selling - variable)
x = 270000 / (600-420)
x = 1500 units
6 0
3 years ago
16) When supply is fixed or the product is unique, then price is A) supply determined. B) demand determined. C) government deter
Rudiy27

Answer: B) demand determined.

Explanation:

If the supply of a good is fixed or the product is of a unique kind, the price of the good will be determined by the amount of demand for it.

Normally supply can change based on the quantity demanded which will impact prices but if the supply is definite, this means that the supply curve is inelastic and the only curve that can affect price therefore is the demand curve.

If more people demand the good, it will increase in price and if less people demand it, it will fall in price.

3 0
2 years ago
Janice has two sons, Jerry and Barry. Janice is responsible for picking out what cereal Jerry and Barry will eat. Her husband, H
3241004551 [841]

Answer: Decider

Explanation:

Janice functions as a decider her family, where she decides the kind of cereal her children would consume. A decider is simply a person in charge of making decisions on an issue.

5 0
3 years ago
Which country increased their medal count the most from 2010-2018
Vika [28.1K]
 Korea has been steadily increasing their number of participants with every event.
6 0
3 years ago
Other questions:
  • The following information was taken from the 2011 income statement of Ultimate Sales: Pretax income, $12,000; Total operating ex
    11·1 answer
  • A console game, ZOMBIES!, has come out recently. It sells for $60. Which of these might lower the price of the game?
    11·1 answer
  • Courtney recently ordered a few books online. However, she received the wrong order. She was completely dissatisfied and returne
    5·2 answers
  • Buddy Slaton has only one itemized deduction item, the $3,000 he gave to his church. His standard deduction this year is $5,450,
    9·1 answer
  • On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable, $7,2
    11·1 answer
  • Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly dem
    12·1 answer
  • The following information is available for Trinkle Company for the month of June: The unadjusted balance per the bank statement
    8·1 answer
  • Each year, Tom and Cindy Bates (married filing jointly) report itemized deductions of $20,000 (which includes an annual $4,000 p
    8·1 answer
  • Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil f
    5·1 answer
  • On December 31, 2017, Turnball Associates owned the following securities, held as a long-term investment.
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!